Insider Trading: Centerfold Style

by Todd Shriber

Until earlier this year, Playboy Enterprises was a publicly traded company and enjoyed all of the responsibilities and obligations that come with that. One of the burdens of being publicly traded is there is always a chance someone will see fit to engage in some insider trading, and Playboy appears to be no exception.

Bolstering all those jokes about corruption in Illinois politics, William A. Marovitz, a former Illinois state legislator and Playboy founder Hugh Hefner’s son-in-law, has gone the way of Raj Rajaratnam and gotten ensnared in an insider-trading scandal involving Playboy shares.

The Securities and Exchange Commission sued Marovtiz, accusing him of insider trading. Marovitz was accused of profiting to the tune of $100,000 on information he got from his wife, Playboy CEO Christie Hefner, Hugh’s daughter, according to The New York Times.

Marovitz has agreed to pay $168,000 in penalties, disgorgement and interest to settle the civil case, the Times reported. That’s good news for the SEC, but the case still leaves some questions to be answered. Citing the filing, the Times notes Marovitz was warned by both his wife and Playboy’s general counsel to not engage in insider trading, but he allegedly proceeded to anyway.

Why did his wife continue to discuss material information about Playboy around him knowing there might be negative ramifications? After all, this wasn’t a one-time affair. Marovitz allegedly traded Playboy shares on insider information from 2004 to 2009, the Times article said.